In Steps 4 & 5 of how to buy a home we discussed searching for homes and finding the right one. In today’s post, we are going to talk about Making an Offer
Once you make the offer there will be several pieces of documentation you must sign and submit. Do not drag your feet as the offer can not be submitted without the whole package. The offer package includes: Your contract to purchase, the Massachusetts mandatory licensee disclosure form, your pre-approval or proof of funds and a check for your escrow deposit. Your escrow deposit is the first of two deposits you must put down to secure the home for purchase. The higher this deposit the stronger the offer. Typically minimum offer deposit is $1000 but it can be much higher depending on the value of the home and the strength of the offer. Even if you are using USDA or VA with 0% down payment you still need the deposits to secure the home.
You can not buy a home if you do not have at least funds for deposits, inspections, appraisal and closing costs, nor should you. You should always have a buffer in a savings account if you are to become a homeowner. You will no longer have the luxury of calling a landlord if the water heater dies or the roof springs a leak. You will need to pay to fix these items. If you have financed using 0% down it is even more important to have an emergency fund as there will be no equity to draw from if the home needs work.
Back to the deposit check for the offer- this check is typically made out to the listing brokerage. This brokerage will hold the funds in escrow. Escrow is an account that will be drawn from at closing to cover your costs, down payment and proceeds to the seller or commissions to agents. The homeowners do not have access to this account. Your escrow deposit can be refundable based on contingencies. We will discuss these contingencies at steps #8 & #9
Once your offer package is submitted it is typical to give the listing agent 24 hrs to present the offer to the sellers. In a hot market it is not uncommon to shorten this time frame. But do keep it realistic. If you are not submitting an offer until 8pm do not have the offer expire at 8 am. The listing agent needs at least 8-12 business hours to get in touch with their client. If submitting the offer at 8 am I have written offer expirations by 5pm. Especially if the offer is full price or above list.
What happens after an offer is presented? Negotiations, multiple offers, escalation clauses and waivers